- PRA reported another excellent quarter of cash collections, particularly in the U.S. business, and another excellent quarter with respect to cost efficiency and margins.
- At this point, management is not assuming that the underlying quality of their receivables or collection efforts have improved; management is treating this outperformance as pulling future collections forward.
- Bank charge-offs have been benign, but should accelerate in 2021 if this recession follows typical patterns; further stimulus could extend/improve debtors' ability to repay charged-off debt.
- PRA shares look undervalued below the low-to-mid-$40s even assuming that recent trends are not sustainable.
For further details see:
Another Strong Collection Quarter For PRA Group, But Trends Remain Hard To Read